A host of factors affect stock market activity. Some of them, such as domestic or international economic conditions, are broad in nature. Others may be industry or company specific, such as the success of products, clinical trial results or sales performance. The amount of importance that investors place on the factors that affect the stock market also varies depending on the full economic and market picture. Often, the events and circumstances driving stock market activity are surprising and the response is almost always unpredictable.
The conditions in a regional economy have the potential to affect the stock market. An economy that is contracting, for instance, can block a company's ability to increase its profits, which in turn can cause stock price declines. A growing economy, on the other hand, supports an environment for strong employment and consumer spending, which tends to benefit stocks. Nonetheless, the stock market responds more noticeably to unexpected economic changes than those that unfold over extended periods of time.
Corporate profits are among the factors that affect stock market performance. Investors look to the projections offered by corporate executives and financial analysts to establish expectations but may form their own opinions. In 2012, when analysts warned of lower corporate profits overall, investors overlooked that advice in hopes of a surprise. When corporate profits were revealed to be in line with analyst estimates, investors sold shares in disappointment, sending the S&P 500 index lower by 2 percent, as reported by USA Today in October 2012.
The level of investors' confidence has an effect on the level of participation in the stock market, according to a Santa Clara University study. When confidence levels -- which are fueled by recent stock market performance -- rise, investors become more active participants in the stock market, which drives trading volumes higher. Conversely, in the period of time following a stock market decline, trading volumes tend to be lighter, the study suggests.
Social media is thought to be a driver of stock market performance, although it is difficult to quantify its influence. When the chief executive officer of technology company Netflix, Reed Hastings, used his personal Facebook page to reveal that the company reached a new milestone, the stock price advanced more than 10 percent in the hours following his announcement, according to CNN. The event was a cause for concern among regulators, which argued that the company did fairly distribute the news.
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